Facebook Fund created for entrepreneurs

The popular social networking site Facebook is backed by a number of investors, including the venture capital firms Accel Capital and The Founders Fund. In an unusual move, those two investment companies have created a new US$10 million fund for start-ups.

The fund, known as fbFund (short for Facebook Fund), will offer grants to new ventures that specifically develop applications using the Facebook Platform. The grants do not have to be paid back straight away, and anyone accepting one can also go elsewhere for venture capital as well if the person so wishes. The grants themselves range from US$25,000 to $250,000, potentially offering funding for hundreds of new companies.

Mark Zuckerberg, founder of Facebook, used a talk at TechCrunch 40 being held in San Francisco this week to highlight the fund, commenting, “We are looking for innovative and disruptive things.” Facebook does not, however, have any part in the fund being offered by its partners.

The fbFund is meant to be revolving, and that’s where the grant with strings attached comes in. Companies that accept the grants will return the funding when they become successful, with further funding potentially being added to the initial $10 million pot over time.

The venture capitalists must see a lot of potential in the Facebook model in order to put up money that could see a lot of failures and no financial returns. All projects have to go through a vetting process, however, so it seems unlikely anything will be let through that isn’t going to add some benefit to Facebook.

You will initially see a lot of developers go after the fbFund money, but I doubt the fund will drain that quickly. The people behind it are looking for innovation and something that will make Facebook different from its rivals. Those kinds of ideas don’t come that easily and can take a large amount of time and investment before they even seem feasible.

It will be interesting to see what the fund produces and whether in the years to come the slew of new applications is what pushes Facebook above the other social network sites.